II

        The first cotton mill in North Carolina and one of the first south of the Potomac was built about 1813, on a small stream near Lincolnton, which is now a considerable manufacturing town. Lincoln County had been settled principally by Germans, Scotch-Irish, and Swiss, many of whom had mechanical ability. Michael Schenck, a native of Lancaster County, Pennsylvania, who had prospered in his new home, determined to build a mill. Some of the machinery was purchased in Providence, Rhode Island, and was hauled by wagon from Philadelphia. Other parts were made by Schenck's brother-in-law, a skilled worker in iron. The first dam did not hold and it was necessary to rebuild it lower down the creek. A contract with a local workman for the construction of additional machinery is in the possession of one of the Schencks' descendants. It reads as follows:1 --

        1 Schenck, "Historical Sketch of the Schenck and Bivens Families" (1884).

        "Articles of agreement, made and entered this 27th. day of April 1816, between Michael Schenck & Abraham Warlick of the County of Lincoln and State of North Carolina, of the one part, and Michael Beam, of the county and state aforesaid, of the other part witnesseth; that the said Michael Beam obliges himself to build for the said Schenck & Warlick, within twelve months of this date, a spinning machine with one hundred and forty-four fliers with three sets of flooted rollers, the back set to be of wood, the other two sets to be of iron; the machine to be made in two frames with two sets of wheels; one carding machine with two sets of cards to run two ropings each to be one foot wide, with a picking machine to be attached to it with as many saws as may be necessary to feed the carding machine; one rolling (sic) with four heads. All the above machinery to be complete in a workman-like manner. And the said Beam is to board himself and find all the materials for the machine and set the machinery going on a branch on Ab. Warlick's land below where the old machine stood; The said Schenck and Warlick are to have the house for the machine and running gears made at their expense, but said Beam is to fix the whole machinery above described thereto; the wooden cans for the roping and spinning and the reel to be furnished by said Schenck and Warlick; all the straps and bands necessary for the machinery to be furnished by said Schenck and Warlick.

        In consideration of which the said Schenck and

Warlick are to pay to said Beam the sum of thirteen hundred dollars as follows, to wit: three hundred dollars this day, two hundred dollars three months from this date, one hundred dollars six months from this date, and the balance of the thirteen hundred dollars to be paid to the said M. Beam within twelve months after said machine is started to spinning. In testimony whereof we have hereunto set our hands and seals, the day and year above written.

Test,

ROBT. H. BURTON.

ABSALOM WARLICK. (SEAL)

MICHAEL SCHENCK. (SEAL)

MICHAEL BEAM. (SEAL)

        The mill was prosperous, and John Hoke and James Bivings bought a share in 1819. The firm erected a larger mill of three thousand spindles, the Lincoln Cotton Factory, on the South Fork of the Catawba, about two and a half miles south of Lincolnton. Attached to this mill was an annex, which made various articles from iron. Wagons came from a distance of a hundred miles to secure yarn, and the mill continued in successful operation until burned by an incendiary in 1863. On the site the Confederate government erected a laboratory for the manufacture of medicines, and

twenty years after the war a cotton mill again began operations.

        In 1820 Colonel Joel Battle, the grandfather of Professor Kemp P. Battle of the University of North Carolina, opened the Rocky Mount Cotton Mills in Edgecombe County, with more than two thousand spindles. Coarse yarn for neighborhood consumption was spun here by negroes. Nearly all of them were slaves, belonging to the mill owners, or to their neighbors, though a few free negroes were employed. White labor was substituted in 1851.1

        1 See Chapter XIII.

        Apparently the first application of steam to the industry was at the Mount Hecla Mills at Greensboro about 1830. The machinery for this mill was shipped from Philadelphia to Wilmington, then up to Cape Fear River to Fayetteville, and was hauled across the country

by wagon. When wood for fuel grew scarce, the machinery was moved to Mountain Island, where it was run by water power.

        Soon after 1830 E. M. Holt, one of the most successful manufacturers the state has known, built a mill on Alamance Creek. Finding difficulty in disposing of all his yarn, he began between 1850 and 1860 the manufacture of coarse, colored cloth known as "Alamance plaids." Success attended the venture and the product became more than locally known. To-day, throughout central North Carolina, "Alamance" is almost universally used as a synonym for the coarse ginghams on the shelves of the country merchants. Other mills were built by him and his sons, and the family is prominent in manufacturing at the present time.

        In 1840 Francis Fries, a descendant of a Moravian minister, who had had some experience in cotton manufacturing as agent of the Salem Manufacturing Company, began a small wool business. To this was added dyeing vats

to color the cloth woven by the farmers' wives, and later spindles and looms were added.

        Other mills had been built during the decade, and in 1840 twenty-five establishments were reported to be in operation. The total number of spindles, however, was only 47,900, with 700 looms. The number of operatives was only 1200, the capital $995,300, and the consumption of cotton 7000 bales, totals surpassed by single establishments at the present day.

        During the next twenty years the number of establishments increased, though the spindles decreased. In 1860, 39 mills with 41,900 spindles and 800 looms were reported. The consumption of cotton is given as 11,100 bales, the capital as $1,272,750, and the number of operatives as 1755. It is noteworthy, however, that only nine of these establishments were in the Eastern counties. The increase in cotton consumption is probably due to more regular operation. Many of the early mills ran only a part of the year. The water power was often imperfectly utilized, and the mill was necessarily

stopped when the streams were abnormally high or low.

        Often the mill was stopped when the neighborhood demand was satisfied. Commercial organization was lacking. Little attempt to secure more than a local market seems to have been made. Instead of selling the whole product to a distributing agent, each mill was its own distributer and depended chiefly upon local demand and upon accidental outside consumers. A third difficulty was the fact that the operatives were such only incidentally.

        Upon Deep River in Randolph County, where five mills were built before 1850, conditions were somewhat peculiar in this respect. These mills were in a section where the Quaker influence was strong. Slavery was not wide-spread and was unpopular. The mills were built by stock companies composed of substantial citizens of the neighborhood. There was little or no prejudice against mill labor as such, and the farmers' daughters gladly came to work in the mills. They lived at home, walking

the distance morning and evening, or else boarded with some relative or friend near by.

        The mill managers were men of high character, who felt themselves to stand in a parental relation to the operatives and required the observance of decorous conduct. Many girls worked to buy trousseaux, others to help their families. They lost no caste by working in the mills. Twenty years ago throughout that section one might find the wives of substantial farmers or business men who had worked in the mills before the Civil War. Some married officials of the mills.1

        1 For somewhat similar conditions in New England in the thirties, see Robinson, "Loom and Spindle" (1898).

        In many localities, however, there was difficulty in securing the necessary labor, arising not so much from the feeling that such labor was degrading, as on account of the confinement and the necessary subordination. The people had been accustomed to out-of-door life for generations. Life was simple, and discontent with the loneliness of the farms had

not assumed its present proportions. To work indoors seemed too great a sacrifice.

        The spirit of independence was strong in the rural population. They felt themselves as "good as anybody," and disliked to take orders. They did upon their own farms labor of the same sort, and much that was more unpleasant; but this was done for themselves. Both men and women worked for wages for their more prosperous neighbors, but their position was not distinctly menial. They were not so much working for that neighbor, as they were working with him, assisting him and his family.

        Such workers were not considered servants, but ate at the family table, and occupied rooms in the house. Working in a mill under overseers seemed to many a sacrifice of independence, and any curtailment of personal liberty was resented. On one occasion, the attempt to prevent operatives from looking out of the windows, by painting the glass, would have resulted in a general strike but for the restoration of the clear glass.

        Further, the large emigration had left many vacant farms, and there was abundant room for all upon the soil. As the state came more and more under the influence of the plantation system the ambition of every farmer, however small, was to become a planter. To go to the mill with the intention of remaining meant the definite abandonment of such ambition, and few were willing to make that sacrifice.

CHAPTER IV
THE GROWTH OF THE INDUSTRY SINCE 1861

        THE beginning of the Civil War found the state with less than $1,500,000 invested in cotton manufacturing, possibly $300,000 in wool, and as much in iron. Yearly she was growing more dependent upon the North and upon Europe, not so much from the decay of the industries already existing as from lack of their expansion. The home manufactures had not kept pace with the increasing wants. In some industries they had actually declined. "Yankee Notions," in increasing quantities, were imported following the increasing reliance upon cotton growing.

        Within twelve months after the beginning of the war the state became as it had been in 1810, to a great extent, self-sufficient. The cotton, woolen, and leather manufactories were taxed to their utmost capacity. Spinning

wheels and looms which had been retired to the attics were again brought into service. With the purchase by the state, under direction of the great war governor, Z. B. Vance, of the steamer Ad-Vance, state direction was added to the activity. This boat, which made eleven successful trips through the blockade before it was captured, brought in many things which were sorely needed. Sixty thousand pairs of hand cards for preparing cotton and wool, machinery for manufacturing shoes, textile repairs and supplies, were included in the cargoes.1

        1 For an interesting account of state activity, see Governor Vance's article in "History of North Carolina Regiments," Vol. V (1901), also printed in Dowd, "Life of Vance" (1897).

        An account of the efforts and expedients of the people during that period would make a book of intense interest. Nothing was wasted. The law forbade the distillation of grain into alcoholic beverages. Luxuries were foregone, and for every supposed necessity no longer procurable a substitute was found.

        The cotton manufacturers, in striking contrast to their course elsewhere, did not take advantage of the increased demand to pile up fortunes for themselves. Almost without exception they refused to sell their product to speculators. They were usually men of standing and influence in their neighborhoods, and valued the respect in which they were held. The value of public opinion as an economic force in the South has never been properly estimated. It is a power to-day, and the man who demands his pound of flesh from a helpless, unfortunate neighbor is censured for his harshness, rather than praised for his exactness. Social aversion makes his position like that of the usurer. Some primitive ideas of the duties toward neighbors still prevail.

        The course of General W. H. Neal of Mecklenburg County is perhaps typical. He owned a little mill, containing only 500 spindles and a few looms, which had begun operation in 1850. When the demand for yarn exceeded the supply, he adopted the plan of considering the

absolute necessities of applicants, rather than their desires. The soldiers' widows came first, and even his own children were forced to take their chances with other applicants. He was paid in Confederate money, though speculators offered to pay in gold. The fate of this mill was that of several others. In 1866 the machinery was so worn that further operation was unprofitable, and a grist mill took its place.

        When the state was overrun with Federal troops, a number of mills were destroyed. Among them were the Rocky Mount Mill, burned in 1863, and the plant of the Richmond Manufacturing Company, which was burned by Sherman's army in 1865. This mill, which had been in operation since 1833, was rebuilt and enlarged in 1869, and has been in successful operation ever since. Five mills, in and around Fayetteville, were also burned in 1865, by order of General Sherman.1

        1 Vance, "Last Days of War in North Carolina," in Dowd, "Life of Vance" (1897).

        The mills which escaped destruction before peace was declared were generally in poor condition. The machinery, tried by the strain of years, was worn and much was obsolete. Some owners were ruined by emancipation and the disarrangement of the whole economic system, and had no capital for renewal. The country was prostrate, the future was uncertain, and the outlook was dark. Some mills, sold at auction, brought sums so small that profitable reorganization was possible. Others could find no purchasers and were stopped entirely. Generally, however, the mills continued to run.

        The high price of cotton, and the development of the tobacco industry, in the years immediately following the war, brought some money into the state which was almost without a medium of exchange. Indeed, the abnormal price of cotton as a factor in the recovery of the South has not been sufficiently emphasized, even though many evils followed in its train. Though cotton had been growing steadily more important, it had not been the sole crop. On

every farm and plantation, grain and meat had been produced. Now the whole energy was turned into cotton growing wherever it was possible. The other factors, which also influenced this change, will be discussed in another place.

        In 1870 we find enumerated only 33 mills with 39,900 spindles and 600 looms. The capital invested was $1,030,900, and the consumption of cotton had dropped to 8500 bales. The average number of spindles to the establishment had risen to 1210--an advance of nearly 20 per cent. which would seem to indicate that the smaller and less economical establishments had not survived.

        During the next decade hope began to return. The reconstruction government, while corrupt, was less greedy than in other states. Some of those profiting by contracts and bond issues invested their gains in industrial enterprises. The great panic of 1873 did not, at first, affect the state severely. The state was so largely agricultural, so little money was invested in manufacturing, and there were so

few banks that the first shock was not severe. Later the general depression was felt in the price of cotton. The high prices had caused the emphasis to be laid upon large, rather than upon economical, production. The price declined almost steadily from 23.98 cents the pound in 1870 to 10.38 cents in 1879, due partly to increased production but also to decreased demand.1

        1 Hammond, "The Cotton Industry" (1897).

        During this decade the textile industry increased. Mills no longer distributed their own product, and much yarn was shipped from the state to be woven elsewhere, though the number of looms was tripled. Forty-nine establishments with 92,400 spindles and 1800 looms were reported in 1880, and the average number of spindles to the establishment reached 1890, an increase of more than 50 per cent. The

capital reported was $2,855,800, and the consumption of cotton is given as 23,700 bales.

        The best farmers had made money growing cotton, and began to invest some of the proceeds in cotton manufacturing. New mills were built, all of which did not succeed. Some managers yielded to offers, tempting on their face, to install machinery which had been used in New England. Farsighted manufacturers there, seeing the possibility of competition in coarser numbers of yarn, began to turn their attention to finer yarns, or else wished to take advantage of new inventions. Machinery, some of it, at least, in good condition, was offered at very low prices to the Southern mills. The result was generally not satisfactory, and as a result a few mills went into bankruptcy.

        Much gratuitous advice was now offered to the section. It was gravely announced by those interested in preventing manufacturing development that the Southern climate was not suitable for spinning on account of the dryness; that machinery could not be kept in

good condition on account of the moisture; that labor could not be found at all; that the native labor could never attain satisfactory skill; that it would be an economic waste to draw labor from the production of cotton into its manufacture. It was prophesied that the necessary managing ability could not be found, and capital was warned not to trust itself in the hazardous enterprise. Extreme solicitude for the savings of the South was also manifested.

        But the habit of mind of the Southern people was changing. Those who had saved land and capital from the wreck of the war, or had gained them since, began to tire of the never ceasing contest with the inefficiency and unreliability of the freedman. As the older negroes who had been trained under the discipline of slavery became superannuated, it was found difficult to secure efficient laborers. The younger negroes preferred to work in gangs in the turpentine forests, at railway construction, or not to work at all. Hundreds of well-to-do

farmers, disgusted with the struggle, practically abandoned their farms and moved to town, there to seek profitable occupation and investments. The country merchant also began to dream of managing greater enterprises.

        Sometimes they were surprised at their success. Commercial and industrial ability was found not so rare as had been supposed. As their interests grew, ability to manage them was developed. The old idea of comfort -- life upon a plantation -- was no longer unchallenged. But more than this, the people generally began to be convinced of the probability of Southern industrial success. The awe of the ingenuity of the thrifty Yankee was no longer so pronounced. The people began to be willing to invest their surplus or savings in something other than a land mortgage.

        Under a plan which will be described elsewhere, these savings, individually small, but large in the aggregate, were poured into cotton manufacturing. Towns in which not a single man could be accounted rich even by the modest

standard prevailing, began to discuss the erection of manufacturing establishments. The process was not rapid. Inertia, timidity, inexperience, were to be overcome; but after 1890 the building of mills went on with increasing rapidity. The majority were small neighborhood affairs, but they were profitable.

        The manufacturers of New England generally did not realize the revolution that was taking place in Southern life. That section had crippled or destroyed industrial enterprises existing in the South before the war, and it was difficult to believe that there was any menace to her supremacy in the textile industry. But the new Southern mills were not the same old wasteful establishments. New plants were built from the profits of the old. The newest machinery was installed. The unprofitableness of second-hand machinery was recognized, and only the best was bought.

        The machinery houses began to take great interest in the development. Agents were sent to encourage building, and favorable terms

of payment were granted. When sufficient capital seemed difficult to secure, the manufacturers of machinery offered to take a part of the price of the machinery in stock.

        The statistics for 1890 show plainly the progress of the industry. The number of establishments was 91, and the number of spindles, 337,800, was more than three and a half times the total of ten years before. The number of looms, 7300, was more than four times as great. The capital reported as invested was $10,775,100, and the consumption of cotton, 107,100 bales, was nearly a third of the state's production.

        With the publication of such statistics the attention of the North was fully aroused. The statement that the South could not manufacture cotton successfully was no longer heard. The march of events had proved the falsity of that prophecy. Some Northern manufacturers began to erect branch mills in the South. Few of these, however, came to North Carolina, but were located farther

south, nearer the center of the cotton belt. The state had learned to rely chiefly upon its own endeavors, and ceased calling for outside capital to develop its resources.

        Not every new mill was advantageously located. Nearly every little town in the central or west-central portion of the state built a mill or mills. Some were built away from rail-roads, sometimes to utilize water power, sometimes to secure cheap fuel or abundant labor. These advantages were often apparent rather than real, or at least temporary, or unreliable.

        Profits, however, seemed almost certain. Mills, though not always economically managed, paid good dividends, and the best were phenomenally successful, though sometimes at the expense of a reserve for depreciation. The whole profit, in many cases, was paid to the stockholders and nothing was retained to replace worn machinery, nor to provide a reservoir from which dividends might be paid in a less profitable season.

        The result, following these large dividends,

was almost a craze for mill building. Mills were too often built to produce those particular yarns which were most profitable for the moment, without due consideration of permanency of profit; or the interested advice of some commission house which made a specialty of certain numbers was followed; but as the managers have learned more of the business, the tendency toward finer numbers has been well marked.

        The statistics given for 1900 illustrate the tendency. In 1890 the state produced 41,972,080 pounds of yarn below number 20, and only 3,076,558 pounds between number 20 and number 40. None finer than number 40 was reported, and the amount above number 20 was only 7.09 per cent. of the total production of the state. In 1900 the proportion was much changed. The number of pounds under number 20 was 99,021,341, but the amount between number 20 and number 40 was 56,527,998, while 886,200 pounds of yarn finer than number 40 were also reported.1

        1 U. S. Census Bulletin 215.

        Before 1890 the question of satisfactory labor had not been entirely solved. The better class of population was not easily drawn from the farms to the factories. After 1890 the price of cotton, owing to increased production both of the domestic staple and of Egyptian and Indian, and also to the depression following the panic of 1893, went lower and lower. On the bulk of the crops of 1894 and 1895 the farmer realized little more than five cents, while much was sold below this low price, which was less than the average cost of production. Low prices for tobacco, corn, and wheat accompanied the ruinous price of cotton.

        These unprecedentedly low prices of their products brought much distress to the farming population. Crops brought hardly more than fertilizer bills, allowing nothing for labor. Live stock brought less than the cost of feeding, even at the prevailing low prices of hay and grain. To secure the cash to pay taxes was a difficult problem. Debts incurred when times were easier were now a crushing burden.

A mortgage, once easily carried, was now an impossible load. Farms were sacrificed for a small part of their supposed value. The political revolution growing out of the prevailing discontent will be discussed in another place.1

        1 Ch. X.

        Meanwhile the cotton mills seemed the only enterprises unaffected by the prevailing depression. The mills were running at their full capacity, often both night and day; were selling their yarns at a profit in Philadelphia, New York, and Boston, and were sending cloth to the Orient, and a limited quantity to South America. To the mill towns turned the discouraged from the farms, hoping for better times in industry than in agriculture. Renters and laborers went to those places where there was work with money wages for all. Landowners also sought employment. In some neighborhoods the movement assumed almost the proportions of an exodus. Among the migrants were the lazy, the shiftless, and the incapable, but there was also the hard-working,

honest element, which hoped to better its condition by industry.

        As new mills were completed they were as quickly filled, even though situated out of the cotton country. When expenses of moving are offered in addition to wages, operatives can be drawn from other mills, though careful selection cannot always be exercised. The mobile labor is usually the unsatisfactory labor. Much of this willingness to move is due, however, to lack of adjustment to surroundings of the population, so lately taken from the soil. The new life cramps them at some points, and they move in the vain search for the freedom of the old, together with the advantage of the new.

        With the return of higher prices for agricultural products, together with certain agencies tending to make life in the country more attractive, the movement toward the mills has become slower. Greater inducements are necessary to attract the new material from which efficient workers may be made. During

the summer of 1904 many mills were without their full complement of operatives. Wages in North Carolina mills have been seldom cut. Nearly every advance has been permanent. So, in order to avoid formally raising the rate, which might be difficult to reduce, should the scarcity prove only temporary, some managers adopted an ingenious substitute. This was to pay the operatives for running more machines than could be efficiently operated. For example, a spinner capable of managing four "sides" would be paid for six, though two were only nominally in operation.

        Meanwhile the building of new mills had gone on rapidly, and the average number of spindles also was increased. Mills to spin finer yarn and "specialties" were built, and finer cloth, both white and colored, was produced. Here again the prophecies from New England, that the Southern mills must confine themselves to the coarser grades, were disproved.

        Though the trouble in China reduced the profits by curtailing the markets of the existing

mills, the promoters were not frightened. The movement reached its climax about 1903, when twenty-nine mills were in process of construction. Since their completion there has been a cessation of building activity. The market has been glutted at times, partly owing to the troubles in the East already mentioned; partly to overproduction of certain numbers and grades; partly to the decreased demand resulting from higher prices of cotton. Mills with established reputations, however, have continued to make profits, although others have become bankrupt.

CHAPTER V
THE PRESENT STATE OF THE INDUSTRY

        THE traveler through some parts of North Carolina is seldom out of sight or hearing of a cotton mill. The tall chimneys rise beside the railway in nearly every town. Side tracks from the main line lead to the low brick mills and the clustering tenements, set down in fields where crops grow almost to the doors, or in the forest where a clearing has been made.

        The state has more separate establishments than any other. Almost one fourth of the mills in the United States are within its borders, though in production it is only third. There are no great establishments like those in Massachusetts, New Hampshire, or even South Carolina, which count their spindles by the hundred thousand. The largest of the 263 cotton or woolen mills reported in 1904 has only 75,000 spindles and about 2000 looms; and

this is really two mills more than a mile apart, though under the control of the same corporation, and the second and larger was built from the profits of the first. Some mills are so small that successful operation would seem impossible. One woolen mill has but 168 spindles and no looms, while one cotton mill has only 820 spindles. The average number of spindles is a little over 8000,1

        1 2,178,964 spindles ÷ 263 = 8285.

        48,612 looms ÷ 263 = 185.

        The discrepancy between the number of establishments reported by the Census and by the State Bureau is explained by the fact that the former reports mills owned by the same corporations as one establishment.

        Many of these mills, however, have no looms at all, but sell the yarn produced. Around Philadelphia especially, and to a less extent in New England, are many mills which weave only and buy their yarn. In such mills the variety

of goods woven and the frequent changes make the production of all the numbers and qualities unprofitable or impossible. Some of the North Carolina mills sell their product to others in the neighborhood. Where one family or one interest controls several mills, one establishment has often been built to consume the product of another.

        These mills are located in fifty-four of the ninety-seven counties of the state, in every section from the seashore to the mountains. Much the largest number, however, is in the central or west-central sections. Here the mills are thickest. Gaston County, with a population of 27,903 in 1900, has 32 mills; Alamance, with a population of 25,565, has 23; Guilford, with 39,074 population, has 10 mills, some of them very large; and Mecklenburg, with 55,268 population, has 19. Only 34 are to be found in what are classed as Eastern counties, and only four in the extreme West.

        The older mills were usually located upon streams to utilize the water power, but a

drouth was so annoying that the majority of these have installed steam plants for auxiliary use at least. Comparatively few mills are in the larger towns unless the towns have grown up around them. Generally they are built upon the outskirts of a village. Considerable land is needed for buildings and tenements, and this is secured at farm prices. The operatives are thus separated from whatever distractions the town may afford, and the payment of town taxes is avoided. Many mills are in the country, though generally near a railroad.

        All the buildings are well constructed of brick or stone, and the newer ones are seldom more than two stories high. Light is admitted from three or four sides, and often from the roof as well; and the circulation of air is free, in striking contrast to some old New England mills. There, in the summer of 1903, I visited a mill where electric lights were burning at noon, though the sun was shining brightly outside. The air in the mills which spin the finer yarns is kept moist by humidifiers, which

throw out water in a fine spray. In summer the spinning rooms are pleasanter than the offices or stores near by.1

        1 For confirmation, see Young, "American Cotton Industry" (1903), p. 67.

        The equipment of the newer mills is the best. Fewer mills here run obsolete patterns in machinery than in New England, and all instruments of production are better, because newer. Every improvement, every labor-saving device, is installed. The time is long gone when Southern mills are equipped from the scrap heaps of other sections. The expensive Draper-Northrop loom which saves one half to two thirds of the labor in weaving plain goods is extensively used, while its introduction

into New England has been proportionately much slower. There managers of mills have felt that they could not afford to scrap their ordinary looms, perhaps running better than new, to invest in this expensive invention, which is not yet entirely perfected. Meanwhile the Southern mills which have installed them are reducing materially the labor cost, and with it the profits of the New England mills.1

        1 The Boott Mills at Lowell have just been reorganized (1905) after failure largely due to neglect to keep abreast of recent improvements in machinery, if the current reports are to be trusted.

        The product of the North Carolina mills is yarn, "gray" (unbleached) cloth, plaids, ginghams, denims, toweling, canton flannel, hosiery, etc. By far the greater number of them are employed in the production of coarse cloth and the coarser numbers of the yarn, from 12 to 24.2

        2 For classification of yarns, see Ch. VIII, p. 132.

skill in the manufacture, but with the increasing competition in these grades the tendency toward the finer numbers is steady. The Avon Mills in Gastonia spin number 60's from Egyptian cotton, and the Daniel Mill at Lincolnton has spun from combed sea-island cotton the finer numbers up to number 100.

        There has been little difficulty in securing labor capable of the manipulation of fine goods. Of course, operatives fresh from the farms cannot at once display the requisite dexterity. By selecting those already trained upon coarser goods, as individuals, rather than employing whole families, success has followed. The mills making fine goods are necessarily confined to mill centers, where a large body of operatives is present from which selection may be made. Thus two predictions of Edward Atkinson have been disproved: the one that Southern cotton mills could not be successful; the second and later that only coarse goods could be made.1

        1 Address printed in "Report of Director General International Cotton Exposition," at Atlanta (1882).

        The development of the cotton industry in North Carolina is a striking instance of the manner by which a people in poor or moderate circumstances can establish manufactures. Little foreign capital has been invested in North Carolina, contrary to the condition in South Carolina, Georgia, and Alabama. It is manifestly impossible to secure the residence and holding of every stockholder; but those best informed estimate that 90 per cent. of the capital has been invested by residents of the state. Further, the Northern capital has come chiefly since the success of the mills has been assured. The industry is distinctly a home enterprise, founded and fostered by natives of the state. During the ten years just past, several large mills have been built with foreign capital, but they have not greatly changed the proportion. A larger amount of such capital has been invested in mills already in operation, or has enabled a successful manager to enlarge his plant.

        The ownership of the mills is widely distributed.

While there are many in which a single man, or a single family or group, owns the whole, or a controlling interest, as, for example, the Holt family in Alamance and Davidson counties, which owns more than a dozen mills, the stock in the majority is widely distributed, owing to the method of building, which has often been an installment plan, on the following order:--

        The subscription to the shares (usually of a par value of $100) is made payable in weekly installments either of 50 cents or $1 the share, without interest. Occasionally a mill has been built with a 25 cent installment. Experience has shown, however, that this requires too long a period, as nearly eight years is required to pay the stock in full as against four or two years for the larger sums. Those having ready money may pay the whole amount at once less 6 per cent. discount for the average time, making the stock cost $89.60+ in cash. Usually nearly or quite a year is required to construct the buildings. The installments

more than suffice to pay the expenses, as real estate and buildings rarely cost more than 20 per cent. of the capital stock. The installments and the amount paid by those who have taken advantage of the discount is placed in some bank, which is thus put under obligations to the mill, and besides has a lively anticipation of business to come. Often the directors of the mill are also stockholders or directors of the bank. Machinery may be bought on long credit, six, twelve, or even eighteen months, with interest at 6 per cent. after delivery. Sometimes the makers of machinery have taken a part of the cost of the machinery in stock, and in a few instances the commission houses have also subscribed in order to control the product. There has seldom been any bonded indebtedness intended to be permanent.

        Profits in the past have been so large that often before the last payment on the stock is due, a sum sufficient to pay all obligations has been accumulated. One especially successful mill of this class, organized with a capital of

$100,000, secured the buildings of an unsuccessful woodworking establishment, which with alterations and additions were adequate for the purpose. The installment was fifty cents the week on each share. When $35 a share had been paid in, in seventy weeks, a dividend of 4 per cent. on the capitalization was declared, and it has never failed to pay either 4 or 5 per cent. each half year since. Further, a large addition has been built and set in motion from the profits of less than ten years' operation. This is by no means universal. Some have not paid dividends for months after the stock was entirely paid in, and a few have never been profitable.

        At first, the stock is widely distributed. Bankers, merchants, physicians, clerks, lawyers, teachers, mechanics, and even operatives in other mills subscribe. When difficulty is experienced in securing the desired amount, subscriptions of one share may be accepted. The average holding is seldom above $1000. This widest distribution does not last, of course.

Some subscribers find difficulty in keeping up their installments and transfer their subscription to others; some grow tired of waiting for dividends, which seem slow in coming. Some, who have used their subscriptions as a savings bank, sell in order to buy a home, or to start in business for themselves.1

        1 The frequency with which new mills have been started, and the success of the local Building and Loan Associations, have a decided effect upon the size of deposits in savings banks. On this point, see the testimony of S. Wittkowsky before the United States Industrial Commission, Vol. III.

have those directly in control attempted to "freeze out" the small investor, though such instances in other Southern states are not unknown.

        The effect of this wide ownership influences public opinion in several directions. The attitude of any rural or semi-rural community toward the larger corporations is generally hostile. This state is no exception, as the verdicts in damage suits against railroads and telegraph companies plainly show. Toward the cotton mill, however, the attitude has been decidedly friendly. Boundary lines have often been changed to throw a proposed establishment outside the town or village limits, for a time at least. The mill thus escapes the payment of town taxes until it is well established, and often for a considerable period thereafter. Thus many communities have a considerable population which really belongs to the towns, though it does not appear upon their census or tax returns.

        This attempt to lighten the burden of taxation

is shown in other ways. Though the law demands that all property shall be assessed at its true value, it has been generally understood that the assessment of real estate, live stock, etc., is not more than two thirds to three fourths of the real value. The same principle has been applied to the mills. Formerly mills, which possibly had built large extensions from surplus, would be assessed simply upon the capital stock. A mill, the market or book value of which amounted to 100 per cent. advance on the capitalization, might pay taxes upon only three fourths of the capital stock. Though the method of assessment has been changed, the mills do not yet pay taxes upon their market value. This has not been done by the collusion of corrupt officials, but by common consent.

        In many other ways the mills have been favored. The motive of many investors has been not only to secure a profitable investment but to "help the town." The pay roll of a $100,000 mill--a favorite size--ranges perhaps

from $200 to $350 per week. The value of the cotton consumed weekly, depending of course upon the price and the fineness of yarn, is between $400 and $3000. Both the operative and the farmer spend a large proportion of this sum in the town. The money paid for fuel and other supplies is often large, and the influence of this expenditure in a small town is enormous. It is the general sentiment that such a stimulus to trade must be fostered. This attitude of friendliness is changing in some sections, however, and suits are more frequent.

        The profits in the North Carolina mills have been large. There are, of course, as many rates as there are mills. The best authority upon cotton manufacturing in the South, Mr. D. A. Tompkins of Charlotte, estimates the average net profits for a period of twenty years up to 1900 at about 15 per cent. Since that year the average rate has probably been less. Some mills have made much more. Instances of 40 to 60 per cent. dividends are not unknown. In such mills, however, the plant

has been enlarged from profits without proportionately increasing the capitalization. A mill which does not accumulate a surplus suffers during a less profitable period, however. Even when a surplus appears upon the books, it is often more apparent than real, since proper allowance is not always made for depreciation. The mills are so new, and so little is known of accounting, that the absolute necessity of providing a fund to replace equipment, when worn or obsolete, has not been realized in every case.

        The unsuccessful mills are often so because of slavery to the commission houses through which they sell their product. Too many Southern mills have been built with insufficient working capital or with none at all. The commission houses charge 4 per cent. on unbleached cloth, and 5 per cent. on yarns and fancy cloths, and sell when and to whom they please. Goods are sold upon sixty days' time, with 2 per cent. discount for cash within ten days. The commission houses, many of which have banking connections, gladly advance

75 to 90 per cent. of the market value of unsold goods, charging the mill double the rate of interest which they themselves must pay for the money. Thus interest charges often eat up profits. The commission house to which the mill is indebted may demand entire control of its output, and the manufacturer may not receive in every case a price as high as might be realized in a market entirely free. Mills without adequate capital have succeeded only because there has been generally a large margin between cost of production and the average selling price. With the great increase of competition, the mill handicapped by debt from the beginning finds successful operation increasingly difficult.1

        1 See Tompkins, "Cotton Mill, Commercial Features," p. 128, and Young, "American Cotton Industry," p. 117.

        An apparent contradiction of economic law is found in the fact that the profits of the smaller yarn mills have seemed to be greater than those of the larger establishments. While, owing to the more careless accounting in the smaller

mills, some of this excess does not really exist, all the difference cannot be thus explained. The small mills are usually in the country or in the small towns. They draw their cotton from the surrounding territory, and may save slightly in freights over the mills which must draw a part of their supply from other states. In coarse goods the largest cost is the raw material.1

        1 The following table, calculated by Mr. D. A. Tompkins, shows the relation:--

        

PERCENTAGE OF THE TOTAL COST OF FINISHED PRODUCT
ATTRIBUTABLE TO THE FACTORS OF MATERIAL AND LABOR

	Cotton	Labor
United States	44%	26%
New England	42%	28%
South	59%	19%

        A slight difference in the price of cotton may make a great difference in the rate of profit.

as a ton of coal. When wood is purchased at $1.50 a cord or less as compared with $3.25 a ton or more for coal, the advantage is noticeable.

        Few operatives are needed in one of these small mills. These possibly may be secured from the surrounding farms and become valuable before they are seized with the desire to move constantly, the bane of the factory population. It is easier for the superintendent to secure the personal knowledge of his operatives necessary for success in management.1

        1 See Chap. XI.

        The only disproportionate expense, then, would seem to be cost of efficient management and superintendence. Often the superintendents

of these small mills are men of little education or theoretical knowledge, who have worked up from the position of operatives. They know well the practical side of spinning the few standard numbers, and little attempt is made to diversify product. They understand "managing help," but their lack of training unfits them for the management of larger and more complicated establishments.

        Sometimes the superintendents are young men of education trained in larger mills who take these positions to make reputations. They throw all their energy into the work, knowing that a man of unusual ability and success will not long escape the eye of the managers of the larger mills. It has been increasingly difficult to secure men having that peculiar combination of qualities necessary for the large establishments. Custom has been against promoting a man in the same establishment, and every young man, no matter how obscure his mill, is spurred on by the possibility of securing one of the great prizes. Enthusiasm

counts and often produces greater results than experience.

        Further, a point in favor of the smaller mills has been the increasing difficulty in securing competent mangers of the large mills. A large body of trained entrepreneurs, successful in the management of large enterprises, has not yet been developed. Men successful in the smaller business are not always proportionately so in the larger. When a large establishment loses a successful manager, trouble is often experienced in filling his place. The high grade of managing ability will become more common as a larger proportion of the population turns attention to business careers. Already there are individual managers able to meet successfully any competition, and their number grows larger. Meanwhile, the smaller establishment has paid the larger dividends.

        This condition cannot endure, as many of the advantages enumerated are but temporary. The operatives show an increasing preference for the larger mills, a part perhaps of the general

movement from country to town. The supply of wood is being exhausted, and as the larger mill has usually the more economical engines, the cost of coal will be proportionately greater in the smaller mills. The state spun in 1904 about 96.3 per cent of its cotton crop, and the local supply cannot much longer be depended upon.1

        1 The larger crop of 1904 reduced the percentage of consumption for 1905 to consumption for 1905 to 78.4 per cent.

CHAPTER VI
THE REAL FACTORY OPERATIVE

        MUCH nonsense has been written and believed concerning social conditions in the South before the Civil War. The large planter with thousands of acres of land and hundreds of slaves on the one hand, and the "poor white trash," have been described as comprising the whole white population.

        The Northern writers have not made sufficient investigation, and the few Southerners who have attempted to describe ante-bellum life have often done so sentimentally. Little attempt has been made to correct the prevalent impression, possibly from a desire to be considered as belonging, by descent at least, to the opulent aristocracy; possibly because the truth is not so interesting from a literary standpoint. A typical statement of a Northern

writer is found in one of the widely read Chautauqua Series: "... there was no middle class in the South. The 'poor whites' were ignorant and degraded."1

        1 Beers, "Initial Studies in American Letters," 1895.

        A very slight study of conditions in the several states would have shown the inaccuracy of such sweeping statements. The white population of North Carolina in 1860, 629,942, representing perhaps 125,000 families, contained but 34,658 slaveholders, and these owned 331,059 slaves--an average of less than 10. Such a number could hardly raise the owners into the class of a feudal aristocracy. Moreover, of the total slaveholders, 18,316 owned less than 5, and 12,277 more from 6 to 20. Only 3321 owned from 20 to 50, 611 from 50 to 100, and 133 owned more than 100.2

        2 U. S. Census 1860, v. Population, p. 351.

        Land was, of course, held in larger tracts

than in the North, but even in this respect, conditions in the South were by no means uniform. The average size of farms in North Carolina in 1860, including the large plantations in the East (some of which included much apparently valueless swamp land), and other great tracts of waste mountain land in the West, was 316.8 acres. This is to be compared with an average of 536 in Louisiana, 488 in South Carolina, and an average of 401.7 in the cotton states taken as a whole. In all 75,203 separate farms were reported.

        Further, of all these farms 69.1 per cent. were of less than 100 acres, 28.7 per cent. more of 100 to 500, and only 2.2 per cent. of more than 500 acres.1

        1 Consult an elaborate study of conditions, Von Halle, "Baumwollproduktion" (Leipzig, 1898).

        The character and the life of the settlers of the state have already been described. In the East and the adjacent "pine barrens" were some large plantations, and an approach, perhaps, to a "poor white" class. In the extreme West, among the mountains, the inhabitants lived in 1860 the same primitive lives that their grandfathers had done, but in the great middle or Piedmont region different conditions prevailed.

        Here was a strong, sturdy, middle class. The proportion of slaves to whites, 38 per cent., was smaller than in the East. Counting five persons to the white family, there were only 1.9 slaves for each group. The slaveholders in this section, often held only one, or a single family, though of course there were many who owned a larger number.

        The Scotch-Irish and Germans who had come to this region were not desirous of escaping churches and schools. They sent back to Pennsylvania or to Germany for ministers, and, particularly among the Scotch-Irish,

classical schools were established by the side of the churches.1

        1 Consult Bernheim, "History of German Settlements and of the Lutheran Church in the Carolinas" (1872).

        Clio's Nursery in Iredell, Zion-Parnassus in Rowan, and Dr. David Caldwell's School in Guilford were well known. Here young men, particularly those preparing for the ministry, were grounded in the classics, mathematics, and the strict Calvinistic theology which their preceptors had imbibed at Princeton. The statement of Fiske, that until just before the Revolution there was not a school, good or bad, in the province, is entirely untrue.2

        2 Author, "Some Log Colleges in North Carolina," Presbyterian Quarterly, January, 1900.

        Education was not, however, regarded as a right, nor as a necessity for every one. The interest of the church was foremost; and the dictum that "unsanctified learning has never been of any benefit to the church" was generally accepted. The efforts of the state to establish a satisfactory public school system and the partial success have already been mentioned.

        Throughout this section the people were generally fairly industrious, "good-livers," to use a colloquial expression, though few became wealthy, even by the moderate standards prevailing before 1860. Adequate transportation facilities were developed slowly, and for a long time it seemed hardly worth while to raise more than could be consumed upon the farms.

        The idea that manual labor was a disgrace had no foothold here. The more disagreeable kinds might, perhaps, be called "negro work," and a certain repugnance be felt for such occupations. But dozens of the older men have told me of working in the fields, plowing, hoeing, or gathering the crops, with the slaves.1

        1 For similar conditions in middle Georgia, read Joel Chandler Harris's stories.

        These slaves belonged to their fathers or were hired for the work. A landowner whose labor force was insufficient might hire the slaves of minor heirs under the protection of the courts; or he might secure the services of his less prosperous white neighbors. Whites thus

employed by the smaller farmers ate at the family table and slept in the house, as they do to-day.

        Many of the wealthier families in the Piedmont section, at least, owed the beginning of their fortunes to some artisan or small manufacturer who bought land and slaves with his profits. One ante-bellum United States senator of culture and distinction was descended from an iron worker; another from a hatter; a prominent political leader was the son of a cabinetmaker. Two prominent families, large enough, almost, to be called clans, are descended, respectively, from a blacksmith and a tailor.

        Many men of influence were, or had been, merchants. There was no prejudice against trade. The position of the merchant was close to that of the lawyer and the doctor. It is true that all these classes were likely to be planters also. Every country doctor had a farm. Nearly every lawyer owned a plantation to which he expected to retire with advancing

years. To live on a plantation combining otium cum dignitate was a well-nigh universal ambition.

        The planter in this section did not despise the degrees by which he had gained his ambition. Indeed, it is not too much to say that the Piedmont section of North Carolina was more nearly a social